Hostile move launched for EFG-Hermes bank

  High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email ftsales.support@ft.com to buy additional rights. http://www.ft.com/cms/s/0/d613e956-ad6d-11e1-97f3-00144feabdc0.html#ixzz1wnIH7tls

A group of Arab investors is making a billion-dollar offer to buy investment bank EFG-Hermes from under the noses of a Qatari firm – in what would be the Middle East’s first-ever hostile takeover attempt.

Just as the Cairo-based bank – the largest in the region – firmed up plans to merge into a joint venture under the control of Qatar-based QInvest, investment professionals backed by an Egyptian tycoon and operating under the name Planet IB announced a bid to buy up all the firm’s shares, at a 30 per cent premium to its current price.

High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email ftsales.support@ft.com to buy additional rights. http://www.ft.com/cms/s/0/d613e956-ad6d-11e1-97f3-00144feabdc0.html#ixzz1wnIJxfLJ

EFG-Hermes’ current stock market valuation is $873.9m.

Over the weekend, EFG-Hermes’ management rejected the offer, prompting Planet IB to appeal to Egyptian regulators to bar the sale of the bank to the Qataris.

Mona Zulficar, EFG-Hermes Holding chairman, said: “This strategic alliance [with QInvest] will boost the Egyptian economy with foreign direct investment of $250m and will play a vital role in restoring investors’ confidence in Egypt’s economic environment that has been negatively impacted by the recent political upheaval..”

The regional investment bank, which has seen its shares fall 50 per cent in the past year, was faced with fresh difficulties last week when its two current CEOs and a former chief executive were indicted on corruption charges related to alleged dealings with Gamal and Alaa Mubarak, the sons of Egypt’s newly sentenced ex-president Hosni Mubarak.

Planet IB’s investors say they are trying to maintain one of region’s premier financial institutions, and have lined up leading businesspeople, including Egyptian telecom tycoon Naguib Sawiris, to finance the deal. It plans to operate EFG-Hermes as a “universal bank with a fully controlled and integrated business,” a statement said.

QInvest plans to invest $250m in a new joint venture, called EFG Hermes Qatar, that will own a 60 per cent stake in the Egyptian investment bank.